Wine, in crisis: 4 axes to understand in a sector that will have fewer grapes and more expensive products on the shelves

This Saturday the Harvest Festival, and although the event had the same color as every year, it took place in a worrying setting, conditioned by the extremely weak harvest and the poor commercial results of recent months.

The Minister of Economy of the Nation himself, Sergio Massapresent yesterday morning at the traditional breakfast of Argentine Wine Society (Coviar), acknowledged that in recent years 2,000 vineyards in Argentina have disappeared. Massa announced that there will be “Dollar Malbec”in April, but in return he demanded that prices be kept low at the Argentine table.

The sector remains strong on certain aspects, such as the quality, image and growth of wine tourism, but it is weakening on many others. One of the most worrying factors is undoubtedly production. It is that this year will end the lowest harvest of grapes for winemaking in history.

According to harvest forecasts published by the National Institute of Viticulture (INV)this season 15,352,900 quintals of grapes will be obtained, which will represent a drop of 21% compared to last season, which in itself had already been particularly low.

Of course, hail, frosts and constant heat waves have a lot to do with the fall, but some leaders of the productive sector consulted by GlobeLiveMedia They assured that there are also other factors that lead to a downward trend in the medium and long term. Specifically, they referred to the water crisis that Mendoza (generates lower yields) and the impossibility for producers to invest enough in the vineyard to carry out cultivation work and protect the plants from pests.

In recent seasons there has been a constant discussion about the low prices paid to grape growers, to the point that in some seasons the government has been forced to intervene in the market. Added to this are the payment mechanisms which, according to the references of the productive sector, are usually agreed in installments and begin several months after the delivery of the grapes.

This year, due to very low supply, prices are expected to increase. In fact, the Consultation table high values ​​ranging from $110 to $280 per kilo. These are attractive prices for most producers, although for some higher quality areas “they would be lower”.

The fact is, beyond what is happening this season, the low prices paid in past seasons have impacted grower profitability, which according to references translates into volume declines, or even the disappearance of productive units.

As said, Massa spoke of “Dollar Malbec”but asked that prices remain low.

The good news for the industry is that the minister formalized the launch of Provia IIa funding program that will have 40 million dollars from the Inter-American Development Bank (IDB) and $10 million from the national state to guarantee the modernization of the sector, which aims to rebuild the situation of producers affected by the crisis of recent years.

“Proviar II will fund MyPyMes and to small and medium producers so that they can install irrigation systems, anti-hail meshes, panels and networks of meteorological stations, among others, so that they can have stability and forecasts in the medium and long term,” he said. .

The wine industry had a historic 2021 in terms of exports, reaching $822 million in sales of fractionated wines for the first time. From then on, the figures were always negative.

In 2022, total sales of bottled wine abroad will befell 10% in volume and 6.6% in valuewhich represents a loss of 54 million USD for the wineries.

Exports of concentrates should also fall sharply last year in volume (-22.6%), although a strong improvement in the average international price (growth of 35.9%) enabled the results in terms of turnover to business to improve by 5.2% (6.1 USD). million more).

This year, the story seems to be the same. The January statistics published by the INV show a 0.6% drop in sales of bottled wines and a 14.1% drop in concentrated musts, in terms of volume, although once again the poor harvests in the other producing countries supported the international prices, allowing the poor performance of Argentine wines not to translate into drops in value (10% more charged in fractionated wines and 23% more in musts).

In part, wineries associate the fall with Argentine wines losing competitiveness and being unable to compete in the “entry-level” ranks around the world. This is why the sector celebrated the announcement of the “Dollar Malbec”which will allow them to have a differential exchange rate to liquidate their exports from next month.

“From April, we will put in place a mechanism to strengthen the export competitiveness of regional economies, starting with viticulture and focusing on conquering markets and consolidating its growth and productive development. “, he confirmed. Mass via his Twitter account.

Although much of the claims of the wine sector towards national authorities focus on the lack of export competitiveness, the truth is that practically 75% of the wineries’ total sales. Therefore, it is very bad news that domestic sales remain weak.

According to statistical data published by the INV, sales of wine in the country they contracted by 1.3% for the whole of 2022 and they started 2023 with a 4.3% drop in fractional wine sales (nearly 2.5 million liters less).

This whole situation of poor harvest, price problems and falling sales, contextualizes a crisis that has been taking shape for a long time and which today puts the stability of the “National Drink”.

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